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Things I Didn’t Say

After countless rehearsals of the options, Obama wanted to hear a broader range of voices. So in April, a dinner was set up at the White House with the president and a clutch of big-name economists: Paul Krugman, Joseph Stiglitz, Jeffrey Sachs, Alan Blinder, Kenneth Rogoff. “That turned out to be a defining moment in the debate,” Geithner told me. “Partly because they were all disagreeing with each other, and partly because they knew what they were against but not exactly what they were for and what it entailed—except Krugman. He was the only one willing to say, ‘Look, there’s a good case for nationalizing, but if you do, you have to understand two things: One, it’s incredibly expensive, it’ll cost trillions; and two, you have to guarantee everything.’ ” Once again, Obama cast his lot with Geithner.

Uh, no. I never said that it would cost trillions of dollars. On the contrary, I didn’t think taking over Citi or B of A, which had near-zero market caps at the time, would cost much at all. I did say that we’d have to guarantee the debts of the seized banks, much as the Swedes did; but I think I said then, and certainly believed, that we were de facto guaranteeing those debts anyway — that we had already socialized the possible losses, and that the point was to give taxpayers a share of the potential gains.

I’m glad to get credit for being more realistic than the other guys — but Geithner seems to be putting a spin on what I actually said.